Your advisor probably told you to wait. Wait until 70, collect the bigger check, maximize your guaranteed lifetime income. It’s the standard advice and has been for years.

Here’s what they don’t always tell you: for those of you who have done the  hard work and saved a substantial nest egg, that advice deserves a lot more scrutiny than it typically gets.

I’m not saying it’s always wrong; it’s a bet — specifically, a wager that you’ll live long enough to make the math work. And when you actually look at the probability-weighted outcomes, the case for waiting isn’t nearly as airtight as it’s usually presented.

The Basic Setup

For a maximum-earning worker claiming in the mid-2020s, the monthly benefit numbers look roughly like this:

Claiming Age Est. Monthly Benefit Annual Benefit
62 (Early) $3,000 $36,000
67 (Full Ret. Age) $4,200 $50,400
70 $5,300 $63,600

 

Waiting from 62 to 70 buys you an extra $2,300 a month. That’s meaningful. But it comes at a cost: eight years of zero Social Security income. If you ignore taxes and investment returns, the breakeven age — the point where waiting pays off — falls in the early 80s.

Once you factor in taxes and what you could have done with the money? I would just say that the utility of a dollar at 70 is quite a bit different than at 90.

The $220,000 Question

Here’s the thought experiment worth running. Say you claim at 62 and invest the proceeds conservatively — Treasuries, municipals, something boring and liquid. After federal taxes (the government taxes up to 85% of your Social Security benefits, and if you’re in the 37% bracket, you’re keeping roughly 68.5 cents on the dollar), you’re pocketing about $2,055 per month.

Invested at a 3% after-tax return — which seems a good long term estimate for a high income investor even if it is a little high based on today’s interest rates — that money compounds. By the time you turn 70, you’ve accumulated roughly $220,000 in liquid capital.

The person who waited until 70? They have a bigger monthly check going forward. And zero savings from Social Security during those eight years.

That $220,000 is liquid. Not locked in an annuity. Not dependent on living to 88. Available today for spending, gifting to your kids, funding a trust, whatever you want.

Longevity Insurance — Or a Long-Shot Bet?

The honest case for waiting until 70 is this: if you live well into your 90s, the higher monthly benefit eventually more than compensates for the eight years of foregone income and investment returns. It’s a form of longevity insurance.

Which brings us to the table you should actually be looking at:

Age at Death Male Survival Female Survival Net Advantage: Claim at 62 Net Advantage: Claim at FRA (67)
70 70% 81% +$220,000 +$110,000
80 48% 62% +$90,000 +$55,000
90 17% 28% -$90,000 -$20,000
95 5% 11% -$200,000 -$65,000
100 1% 2% -$330,000 -$120,000

Source: SSA Period Life Tables. Net advantage reflects after-tax benefits and invested early-claiming proceeds vs. higher delayed benefit. Figures rounded.

Read that carefully. Waiting until 70 only wins — in a significantly financial way — at ages that only 5% of men and 11% of women actually reach. The advantage of early claiming doesn’t fully evaporate until around age 88 to 90.

When you weight outcomes by the actual probability that you’ll reach each age, earlier claiming frequently produces higher expected after-tax wealth. Not because waiting is a bad strategy in theory — but because the scenarios where it wins are low-probability tail events.

I don’t know how long you’ll live. Neither does anyone else. But, thanks to actuaries, we do know the odds and we should take them into account when planning.

A Few Things That Complicate This Further

If you’re still earning meaningful income from work or a business before your full retirement age, there’s an earnings test — Social Security will claw back benefits if your wages exceed a relatively modest threshold. Investment income doesn’t count, which is a bit ironic. But for high earners still active professionally, this often makes early claiming impractical anyway, which is why many people default to waiting. In that case, the real question isn’t 62 versus 70 — it’s FRA (67) versus 70. The numbers in the table above address that too.

Spouses add another layer. Survivor benefits, the age gap between partners, who has the higher earning record — these all matter. So does your state of health, your family history, and whether your primary concern is maximizing expected wealth or insuring against the scenario where you outlive nearly everyone you know.

These aren’t trivial considerations. Different situations genuinely point in different directions.

So What Should You Actually Do?

I’ll tell you what I tell anyone who asks me about a single ‘right answer’ on a question like this: there isn’t one. Anyone who gives you one without knowing your full picture is selling you something.

What I can tell you is this. The default advice — delay to 70, full stop — is built on an assumption about longevity that may or may not apply to you, and on a math that typically ignores taxes and opportunity cost. Once you put those back in, the calculus shifts. For many affluent households, earlier claiming and investing the proceeds conservatively produces higher probability-weighted wealth than waiting for the bigger guaranteed check.

Delaying to 70 is legitimate longevity insurance. If you have a strong family history of living to 95+, if guaranteed income matters more to you than liquid capital, if your portfolio doesn’t need the extra liquidity — then waiting might make sense for you specifically. But it’s a tradeoff, not a free lunch.

Treat it like the capital allocation decision it actually is. Run your own numbers, with your own tax rate, your own return assumptions, your own health picture. Get a second opinion if your advisor hasn’t walked you through the probability-weighted analysis.

And if anyone tells you the answer is obvious — color me skeptical.

 

For educational purposes only. Not individualized tax or investment advice. Consult a qualified advisor for your specific situation. Alhambra Investments | alhambrapartners.com